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Cerulli: Minority of Advisors Make Majority of VA Sales

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Only 18% of financial advisors sell 12 or more annuity contracts per year, and those advisors account for about 68% of advisor-sold variable annuity (VA) sales.

Analysts at Cerulli Associates Inc., Boston, have reported that finding in a new report on annuities and insurance.

Only about 35% of the 334,160 retail financial advisors actively recommend variable annuities, and VA assets account for just 8% of advisor assets, the analysts say.

Even for advisors in the insurance channel, VA assets amount to just 16% of assets, the analysts say.

One problem is that insurers are trying to offer rich features while limiting risk by restricting the types of investments a VA advisor and investor can use together with the guarantees, the analysts say.

“As insurance companies water down investments, advisors are showing an increased interest in portfolio construction techniques such as non-correlating assets or tactical allocation,” the analysts say. “This watering-down effect by insurance companies is counter to how advisors are investing their clients’ other money, and this, in turn, is discouraging the industry’s most sophisticated advisors from looking at the VA industry.”

- Allison Bell

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